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Latin America Losing Its Competitive Edge as Demand for Commodities Slows DownThursday, June 05, 2014 > 10:07:11
The United States ranks as the most competitive country in the world in a survey of 60 countries by IMD, a leading global business school in Switzerland. The survey finds Europe is recovering some of its competitive edge, while emerging economies, particularly in Latin America are struggling to hold their own.
According to the report the United States owes its top position to its resilient economy, better employment numbers, and dominance in technology and infrastructure. It is followed in the competitiveness ranking by three small economies – Switzerland, Singapore, and Hong Kong – all of which prosper from exports, business efficiency and innovation.
The report finds Europe is doing better than last year, thanks to its gradual economic recovery, but most of the big emerging markets are sliding in the rankings. It says the so-called BRIC countries – Brazil, Russia, India and China – are losing out in the competitiveness race as economic growth and foreign investment slow and infrastructure remains inadequate.
Director of the IMD World Competitiveness Center, Arturo Bris, says China does not perform well in terms of competitiveness because of its lack of good institutional development.
“What we see in China and in BRIC countries in general – Brazil, Russia, India – is that economic growth has happened too fast and has not happened in parallel with the necessary reform in the institutional environment. The business regulation, economic institutions and financial markets, business principles and values, corruption, sustainability - in that regard, at some point, economic growth becomes unsustainable,” said Bris.
Bris says Brazil is in big trouble. He says last year's huge economic growth has translated into social unrest because the country's prosperity has not trickled down to the average citizen. Brazil this year has fallen three places to number 54 pot of 60 in the rankings.
The IMD competitiveness rankings are based on four factors: economic performance, government efficiency, business efficiency and infrastructure. The report says there is no relationship between democracy and competitiveness, though the likelihood of a good government is higher in a democracy.
In Latam compared to 2013, this year Chile dropped from position 30 to 31; Mexico, 32 to 41; Peru, 43 to 50 and Colombia, 48 to 51. The only exception was Argentina which climbed from 59 to 58, while Venezuela remained at the bottom of the ranking, 60.